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Re: Gap Losses
Virginia Power does indeed make you pay for kilowatts. It is an express
part of wholesale, industrial, and large commercial rates. It is built in
to the residential rate which measures the service only by the number of
kilowatt hours you use. It would be unfair to some customers to bill solely
on kilowatt hours. Consider one customer who uses one kilowatt hour/hour
all year long and is billed at the end of each month for 720 kwh and at year
end his bill has totaled 8760 kwh. Another customer takes 8760 kwh all in
one hour and uses none the rest of the year. The utility will have to buy
about the same amount of fuel for each, but for one it will need installed
capacity and reserves for 8760 kw and for the other only 1 kw. The money
costs for the capacity are substantial. The annual capital costs per kwh in
these days are just about as much as the fuel costs per kwh. It would be
unfair to the 1 kwh per hour customer that each be billed only on kwh.
Therefore, most rates are billed in two parts: The first part is based on
the monthly or annual peak kw usage, and the second, on the kwh used. The
fixed costs go into the first part. The variable costs go into the second.
Residential customers would just get mad if presented with a bill based on a
two part rate. Therefore, they are billed solely on kwh and the kw costs
are factored in on a reasonable basis. Wallace Edward Brand
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Name: Wallace Edward Brand
E-mail: webrand-at-dgs.dgsys-dot-com
Date: 10/02/96
Time: 10:43:35
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